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Today’s Final Delivery Trends: Where Does Your Company Stand?

July 17, 2014

Bruce

 

By Bruce Tompkins
Executive Director, Tompkins Supply Chain Consortium

What does the phrase ‘get local’ mean to you? No, it doesn’t mean ‘get local’ while traveling or ‘get local’ in your neighborhood.

It’s a call to action for supply chain leaders everywhere. From a supply chain perspective, ‘get local’ means meeting your customers’ final delivery demands—from personalization to speed of delivery (and everything in between).

Tompkins Supply Chain Consortium was interested in companies’ final delivery capabilities, so we recently conducted a survey to our database on this topic. We found that many companies are ‘getting local’ to be successful in final delivery.

The survey took a closer look at the challenges companies are facing for final delivery, and what plans they have for the future. Read the full results and analysis on this topic by downloading the new report, Final Delivery: Today’s Companies Are ‘Getting Local.’

The report reveals that same-day delivery is not as common as we assumed. In actuality, two-day and next-day are the most popular delivery options. Added charges for same-day and next-day delivery are also very common.

Companies are also ramping up their personalized options. The report shows an increase in store pickup and delivery locker options for customers. Standalone fulfillment centers are on the rise, which indicates companies are ‘getting local’ by improving volume and availability.

In my opinion, we will continue to see these trends grow. Are you seeing any of these trends in your supply chain? How is your company evolving its final delivery capabilities? Are you ‘getting local’? Let me know in the comments.

 

More Resources

Blog Post: The Final Delivery Game: Ship from Store, In-Store Pickup, or Lockers?

Video: The Alibaba Effect

Article: Final Delivery—Shop. Select. Deliver.

Article: Final Delivery for Consumer Products Companies

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Trending: Effects of West Coast Ports Labor Dispute

July 14, 2014

By Chris Ferrell
Director, Tompkins Supply Chain Consortium

Container shipRetailers are paying close attention to labor disputes threatening to bring a stop to imports coming in to West Coast ports. They are anxiously awaiting (and hoping for) a successful dock worker agreement between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA).

Retailers rely heavily on these ports for imported goods coming in from Asia. How could this affect them in the long run? Will this continue to be a major disruption?

We do not expect the ongoing labor negotiations at the West Coast ports to cause a substantial interruption on a wide-spread basis. Shippers still bear the scars from the disastrous 2002 work stoppage and have countermeasures in-place to avoid major disruption.

While it is true that retailers still rely heavily on the U.S. West Coast ports, on a percentage basis they are not as reliant as they used to be. Even when there isn’t a threat of a West Coast work-stoppage, retailers are utilizing Atlantic and Gulf ports to support stores in the Eastern half of the U.S. a lot more than even a few years ago. Savvy shippers have also diversified West Coast destinations to include Vancouver and Prince Rupert in Canada where labor disputes are not at issue.

So, while the West Coast situation may cause a minor up-tick in freight being routed to the Eastern Ports (Eastern freight is up from 38% in January to 41% in May, according to Hackett Associates), it won’t go a lot higher because the Eastern routes have been running near capacity for several months and are now basically full.

What we’ve primarily been seeing is retailers advancing their order timeline—bringing the goods into the same ports as always but ahead of any potential West Coast work stoppage. According to the National Retail Federation, cargo volume into the West Coast was up 6.6% in May over the previous year, with estimates for June being even higher. Even when factoring in an economy that is healthier than a year ago, these numbers suggest retailers are pre-loading Holiday inventory.

Bottom line: the mere threat of a West Coast work stoppage has already been a major imposition and inconvenience to shippers but the actual risk to the 2014 Holiday season is much less.

What are your thoughts on this issue? Do you agree with these predictions? Share your opinion in the comments.

 

More Resources

Article: Inland Port Development: What is the Impact on Shipping Patterns, and How Can 3PLs Take Advantage?

Blog Post: Who Will Win the Race for Freight in the Panama Canal Expansion? Shippers.

Blog Post: West Coast Port Strike Exposes Need to Keep Global Trade Moving through ‘Dual Action’

Photo Credit: Jim Bahn

Thoughts on Upcoming Alibaba IPO: What’s in a Name or Number?

July 7, 2014

By Jim TompkinsNYSE

Since 1999, when Alibaba first started their marketplace of Alibaba.com, it has been clear that the Chinese company has a strong passion for the U.S.

With the recent news of Alibaba going public, some are surprised that they selected the New York Stock Exchange (NYSE) over NASDAQ, that the ticker symbol will be “BABA” and in my view, puzzled as to why the date and price of the IPO will involve the numbers “8″ and “9″. None of these things come as a big surprise to me.

A few revealing points to consider on the Alibaba IPO:

  1. There was an active discussion about where Alibaba would go public. To some, the two finalists were New York and Hong Kong. Unless there were compelling business reasons to the contrary, the answer was always going to be New York because Jack’s vision has always been to be a global firm with a Chinese philosophy and an American base.
  2. The selection of the NYSE over the NASDAQ. For the same reasons that #1 is not a surprise: the NYSE is the largest stock exchange in the world by market capitalization and can also be classified as “more American.”
  3. The ticker symbol “BABA” also was predictable. The two Chinese translations for the word BA are “8” and “fortune”, “wealth” or “prosperity.” Additionally, 8s are very prominent in China—from flight numbers ending in 8, to the opening ceremony for the Beijing Olympics on 8/8/08. Telephone numbers with 8s are also valued, as is the 88th floor of buildings. This significantly stands out in pricing as many ending with 8 (1.88, 2.88, etc.).
  4. Consistent with #3, I anticipate the date and price of the IPO to involve the numbers “8” and “9” (the number 9 translates into “long lasting”). Also, for the exact opposite reasons, I do not expect to see the “unlucky numbers” 4, 5, or 6 associated with the date or offering price for the stock.
  5. The new “All-American” name of the Alibaba marketplace, 11 Main. We get that 11 Main is on Main Street, as in Main Street USA. So, the connotation is not a supercenter or a mall, but rather on Main Street. This is a clear indication that 11 Main will be anti-big box, anti-mass merchant, and a pro-neighborhood shop—a place not to buy everyday common products, but a venue to buy unique and exciting products. But what is so special about 11? This instantly makes me think of 11/11, which is Singles Day in China. Before November 11 was the big Chinese shopping day, it was the big relationship day in China. November 11 was traditionally the day that boy meets girl, who then lived happily ever after. The number 11 then, not from Chinese tradition, but from Singles Day, means a personal relationship. So, what the 11 in 11 Main translates to is a neighborhood place where there is a strong relationship between the merchant and customer. It is a very cool marketplace for the first wave to hit the American shore. But it is not BABA Main, I mean 88 Main, it is 11 Main.

And finally, it is fascinating to watch how Alibaba is changing the way supply chains are viewed in the U.S. In my new video, The Alibaba Effect, I discuss these points in more detail. What you will hear is critical and will help you plan your counteroffensive now and lead your company to success in omnichannel.

 

More Resources

Blog Post: Who Are Today’s ‘Titans’ and ‘Industry Leaders’ in Omnichannel? – Part 1

Blog Post: The Final Delivery Game: Ship from Store, In-Store Pickup, or Lockers?

Paper: Final Delivery – A Roadmap: Drivers and Enablers for Moving Ahead of the Competition

Photo Credit: Daniel Foster

Top 6 Reasons Why You Should Watch The Alibaba Effect

June 27, 2014

By Tompkins International Staff

5652699228_68587eb26c_zHow many of you have heard of Alibaba, the Chinese e-marketplace? Alibaba is the fastest growing e-commerce company in the quickest growing market in the world. CEO Jim Tompkins recently sat down to discuss how Alibaba is changing the way supply chains are viewed in the U.S. Here are the top 6 reasons why you need to watch The Alibaba Effect:

  1. Alibaba does 80% of the online business in the largest e-commerce market in the world.
  2. Out of every dollar of revenue, Alibaba makes 43 cents profit.
  3. Alibaba marketplaces have more than 10 million sellers and more than a billion product listings.
  4. Jack Ma, founder of Alibaba, and Alibaba itself have invested over $1 Billion in businesses in the United States.
  5. Alibaba is planning to invest more than $20 billion in logistics over the next eight years.
  6. Most importantly, Alibaba will either be your competition or your biggest ally. You have no choice but to respond.

What you will hear in The Alibaba Effect video is critical and has never been discussed in detail from a supply chain perspective. Alibaba is changing the game when it comes to supply chains in the U.S.  Watch this video so you can plan your counteroffensive now and lead your company to success in omnichannel.

 

More Resources

Video: The New Demand-Drive Operations – The Only Operations Strategy for Success in Multichannel

Paper: Demand-Driven Supply Chains – Getting It Right for True Value

Video: The Right Fulfillment Center for E-Commerce

Photo Credit: epSos .de

Who Are Today’s Omnichannel ‘Players’ and ‘Laggards’? – Part 2

June 11, 2014

By Jim Tompkins

omnichannelIn my blog post last week, I discussed two types of supply chains in today’s omnichannel world: the titans and the industry leaders. I talked about what makes them successful and what challenges them the most.

As part two in this series, I’d like to shift the spotlight to the other two categories in supply chains: the “players” and the “laggards.”

Let’s first consider the players in omnichannel. While their channels are independent, their work is ongoing to facilitate cross-channel capabilities. Their inventories are separate by channel, but cross-channel transfers are accommodated when allocations are wrong.

The players constantly seek to improve customer satisfaction, but only do so when it can be done without adding significant cost. They do not have an order management system, so orders are filled from the assigned fulfillment center and back orders handled via work-a-rounds.

They are making efforts to improve forecasting and increase inventory turns and product availability. Omnichannel players work hard to control variability to, in turn, improve customer satisfaction.

Then there are the laggards. Their inventories are separated by channel, and each channel is responsible for hitting its forecasts. Omnichannel laggards believe the best way to control costs is to have all inventory of an item warehoused in one building. If customers want faster delivery, it is offered at an increased cost.

The order entry system knows where all inventory is located so that orders for those products are sent to the correct warehouse. Forecasting has not been accurate enough to rely upon, so laggards allow the merchandising organization to predict future demand. Variability is also a challenge, with efforts to have the merchandising organization get better control of it.

Now we have looked at all the different types in omnichannel: the titans, industry leaders, players, and laggards. Which one are you? How can you better improve your omnichannel supply chain? Send me a tweet @jimtompkins or let me know in the comments.

 

More Resources

Blog Post: Who Are Today’s ‘Titans’ and ‘Industry Leaders’ in Omnichannel? – Part 1

Blog Post: The Final Delivery Game: Ship from Store, In-Store Pickup, or Lockers?

Paper: Final Delivery – A Roadmap: Drivers and Enablers for Moving Ahead of the Competition

Who Are Today’s ‘Titans’ and ‘Industry Leaders’ in Omnichannel? – Part 1

June 5, 2014

By Jim Tompkins

omnichannelblogIn today’s omnichannel world, there are four types of supply chains. You can either be a titan, industry leader, player, or laggard.

In this new two-part series, I’ll share in-depth profiles of these four key categories—how they operate, their priorities, and what you need to know about them. Understanding their profiles gives you an advantage. Not only you can you see which category you fall under, but you can also discover which category your competitors are in.

First, let’s look at the titans. Titans understand that channels are an invention of retailers and consumer products companies, and that customers do not see channels. As a result, today’s titans do not see channels.

They have inventories throughout the supply chain that are physically and logically visible. Their inventories are available for any customer—anytime and anywhere. Titans believe customers should define delivery parameters and that it is their job as a titan to respond.

We also know that their order management system is focused on meeting customers’ delivery parameters. Their integrated business planning is supported by a demand-driven supply chain that supports the synchronization of supply to demand. The titans have a high degree of supply chain adaptability that supports a responsive supply chain.

How about industry leaders? While channels focus on offering customers a uniform view of the company, the channels do exist and operate unto themselves. Omnichannel is not about combining channels, but rather about building enough interfaces so that the channels appear to be operating as one.

Industry leaders have inventories throughout the company’s supply chain that are logically linked to be available for any customer at any time and location. They believe customers should decide what excellent delivery parameters are and execute according to these parameters.

Their order management systems allow for achieving great customer delivery at a minimum cost. Sales inventory operations planning (SIOP) is done well and significant progress has been made on high inventory turns and low product mark downs. A high degree of organizational adaptability supports an organization’s ability to respond to marketplace gyrations.

Coming up next week in part 2 of this series, I’ll place a spotlight on the players and laggards of today’s omnichannel supply chain. How do they view their customers? What are their strengths and weaknesses?

And the most important question to consider: which of the four categories do you fall under?

More Resources

Article: Is New York City in Wyoming: Your Omnichannel Strategy May Be Suffering from ‘Warped Geography Syndrome’

Paper: Final Delivery – A Technology Perspective on Omnichannel Retailing

Paper: Personalized Multichannel Logistics

Demand-Driven Supply Chains

May 29, 2014

Gene-TyndallQ&A with Gene Tyndall, Global Supply Chain Strategy Expert

 

Q: How do you define demand-driven supply chains in today’s e-commerce landscape?

A: It’s hard enough to predict retail store sales, but predicting online orders can be even tougher. Why? Because there’s no software with the ability to predict fashion or fads. Consumers want to know instantly what they can have, and they want their products shipped and delivered quickly. This can be done two ways: have everything stored that might sell OR push it back to vendors for them to store. Retailers need to be demand-driven in order to forecast what people will order and have it ready to ship. Understocking and overstocking just won’t work in today’s e-commerce world.

As we know, one of the best ways to stay competitive is to reduce errors in your forecasting. It’s more difficult now with so much demand variability to forecast accurately, but you must try your best to be demand-driven and stay on top of customers’ changing expectations. The smartest retailers forge good relationships with vendors and manage the inventory that they have or can promise. Retailers must always ask themselves, “What are we going to carry?”

Q: What current, real-world examples of demand-driven supply chains stand out to you?

A: Wayfair.com is a great example of an online Internet retailer that doesn’t own anything, and therefore, can be very demand-driven. The products they sell are shipped direct by vendors. Many big box retailers that sell online also don’t carry all of the products that they offer. All that matters is that the product ordered gets to the consumer as quickly as possible.

Another good recent example is Office Depot. They have really improved their online demand-driven strategy by ensuring that their website (which has hundreds of items that they do not own) stays in sync with their vendors for those products they do not stock. Online cart abandonments are problematic, especially when you’re not able to promise product availability. As a solution, the company implemented software from One Network Enterprises and now vendors are online, making product availability instantaneous.

Q: Where do you see demand-driven supply chains going in the future? What trends can you predict? Or can we even predict the path forward?

A: Retailers will never get it perfect, but the closer they can forecast real-time demand, the better. One of the biggest questions will involve where to store what product, and how much of it.  One of the right answers will be to “get local.”  We will see more companies storing locally – in localized fulfillment centers, and in the retail backrooms.

Business-to-Customer (B2C) personalization will also play a big role in the future. Keeping the customer committed by offering a loyalty program will be increasingly important. A lot of online retailers already do this with exclusive flash sales and free shipping for members.

Business-to-Business (B2B) will also require more accurate forecasting patterns and trends spotting. For instance, an office supply chain store knowing when the client will run out of paper will become a necessary function that customers will expect. Forecasting what they will need when they will need it – that’s demand driven.

Q: How do Tompkins International’s services help move companies toward demand-driven supply chains?

A: We drill down into a customized pull (vs. push) strategy, meaning we move companies away from pushing products to their networks and selling customers and towards pulling products to points of sales based on customer demand. We do this by examining their current processes and analyzing their demand and supply practices. For example, a retailer cannot sell 200K units when it only has 100K in stock and only 25K on order. Sales and operations must be more in balance, and as close to real time as possible.

We also help companies determine their “operations strategies,” or how they should operate their businesses in order to achieve their business goals. Defining necessary capabilities in a demand-driven strategy is essential for deciding on networks, facilities, processes, and technology. Viewing and improving supply chains from an end-to-end perspective ensures that operations are demand-driven.

Q: If you could give one single piece of advice to a company looking to become more demand-driven, what would it be?

A: Define it for yourselves. What does demand-driven mean to you? How do you want your company to be viewed by customers and stakeholders in operations terms? And this isn’t something you can just copy from another organization. It isn’t universal. Every company has its own goals, objectives, brand, differentiators and culture. Why customers buy from your company is much more important than whom you are as a company. Deciding how your company will execute will lead to a better operations plan and satisfied customers, which is critical to succeeding in today’s rapidly changing marketplaces.


More Resources

Video: The New Demand-Drive Operations – The Only Operations Strategy for Success in Multichannel

White Paper: Demand-Driven Supply Chains – Getting It Right for True Value

Video: The Right Fulfillment Center for E-Commerce

 

Nashville Is Calling: Register for the 2014 Supply Chain Leadership Forum

May 20, 2014

By Tompkins International Staff

11357510244_6e9d207187_bNashville is commonly known as the home of well-known country music artists and the famous Grand Ole Opry, but what you might not know is that Nashville will also be the home to the 2014 Tompkins Supply Chain Leadership Forum.

Join top supply chain leaders and head to music city for this exclusive forum on August 25-27. Expect plenty of networking opportunities, thought-provoking sessions, and action items to take back to your company.

The conference will kick off on Monday evening, August 25, with a reception to unwind and meet other attendees. We’ll start Tuesday morning bright and early with an opening keynote by Jim Tompkins, CEO of Tompkins International. The morning and afternoon are packed with hot-topic sessions and speakers.

But keep your energy up, because we’ve got big plans for Tuesday night. We’ll head over to famous local restaurant and musician haven The Listening Room Café to enjoy Nashville-style eats, cold drinks, and a private live band.

On the final day of the forum, attendees will participate in more thought-provoking sessions in the morning and join together to discuss key takeaways of the overall event.

Click here to visit the Leadership Forum website and learn more about the event and registration rates. Reserve your spot and register now by contacting Patty Trocchio at events@supplychainconsortium.com or (919) 855-5424.

Want to stay up with the latest Leadership Forum updates? Follow us on Twitter (@jimtompkins) and use hashtag #SCLF2014. Don’t forget to connect with us on LinkedIn and follow us on Facebook too.

More Resources

Top Highlights from 2013 Supply Chain Leadership Forum

2014 Session Topic Areas for Supply Chain Leadership Forum

Photo Credit: Elliott Billings

With Skyrocketing Online Retail Sales, What Is Happening to Real Estate?

May 15, 2014

By Jim Tompkins
CEO, Tompkins International

Fork lift operator w boxes_smallerOnline retail sales in B2C are estimated to grow by nearly 75% by 2018, and today’s B2B sales are more than twice the sales of B2C—and growing faster.

Increasingly, consumer product companies are selling goods online. Specifically, consumer packaged food companies are moving to online retail sales as traditional grocery stores and the Walmarts and Targets of the world transition into private labels. But can these changes affect the real estate industry? Absolutely.

My new article, “From Malls to Click-and-Collect: How Today’s Pace of Change Is Impacting Real Estate,” explores this rapid growth in online ordering and fulfillment and how it is affecting the real estate industry.

Retail stores and malls are experiencing some of the biggest impacts of online sales growth. We see this almost daily with store closing announcements—the biggest being Radio Shack with 1,100 planned store closings for this year. There are also significant effects on distribution and fulfillment as supply chain networks grow substantially more complex due to the sales channel switch from direct to online.

How have you seen the real estate industry impacted by growing online sales? How will your company respond to this pace of change?

 

More Resources

Article: Final Delivery: A Roadmap — Drivers and Enablers for Moving Ahead of the Competition

Article: How Consumers Are Affecting Today’s Logistics Service Providers

Case Study: Growing E-Commerce Company Seeks Distribution and Network Plan

 

Why Data Is Not Information

May 12, 2014

By Jim Tompkins
CEO, Tompkins International

13904995945_7612901f95_bThe five of us sat around a conference table.  My colleague and I were meeting with the CEO, CFO, and Chief Supply Chain Officer (CSCO) from a multichannel fashion and apparel retailer.

The discussion was lively and interactive. We talked about omnichannel, “get local,” and store fulfillment. Just as the CSCO began to make a point on the opportunity to combine distribution and fulfillment, the CFO interrupted the discussion:

“I have not said much in this conversation as the four of you have gotten all excited about e-commerce,” the CFO explained. “To tell you the truth, I don’t think you all know what you are talking about. You guys think the tail should wag the dog. I don’t understand all this discussion about e-commerce, since e-commerce is less than 5% of our sales. What’s the point and why all the discussion?”

My partner and I did not want to push back on the CFO, so we waited for the other two to set the record straight. But to our amazement, the CEO replied: “Wow, yes I guess you are right. E-commerce is only 4.74% of our sales.”

Obviously we could not let the discussion end so far from reality. I had no choice but to speak up.

“I am sure your data is correct with respect to the channel whereby you capture the order,” I said. “For your retail sector, a 4.74% of order capture on e-commerce is typical for a firm with your e-commerce experience.  But a common misconception is that the importance of a channel is somehow related to the revenue recorded in that channel.”

The CFO tried to interrupt me at this point, but I continued. I told him today’s reality is that the majority of customers in the store have shopped their merchandise via e-commerce before they come to the store. In fact, the majority of sales that they call “in-store” are sales that were significantly influenced by e-commerce. So we are not talking about the tail wagging the dog. I explained that we are talking about the value they deliver to their customers and therefore their company’s profitable growth by succeeding in omnichannel and in all channels.

Can you guess what happened next?  Yup, there was a very awkward pause that seemed to last five whole minutes. (In reality, it was probably only about five seconds.) Finally, the CFO started to speak.

“Yes, e-commerce is very important to our customers,” he said. This statement was followed by another awkward pause before the CSCO rewound the discussion to where it was before the CFO interrupted him.

Thirty minutes later as the CEO was thanking us for coming, he asked my partner and me if we could prepare a proposal to help them develop their omnichannel operations strategy and related supply chain capabilities.

Later, as my partner and I sat in a car on the way back to the airport, we both reflected on what would have happened to the interaction if the CFO’s 4.74% data point was viewed as information, and if the company never began the pursuit of their omnichannel strategy.

We will never know, as we are now scheduling the project kickoff. But it reinforced a good message for all companies to remember: never treat data the same as information.


More Resources

Video: The Right Fulfillment Center for E-Commerce

Blog Post: Transforming Operations to Exceed Retail Customer Expectations

Article: The Omnichannel Retail Supply Chain

Photo Credit: Tim Reckmann

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  • All of the information in this blog is the result of Tompkins International's research of public information. There is no information presented that comes from any proprietary source. Tompkins International does not discuss information about their clients unless that information has been published.